Moody's says sub-Saharan Africa has “severe economic challenges” in 2021

The credit rating agency Moody's warned today that sub-Saharan Africa will face “severe economic challenges” this year due to the crisis exacerbated by the covid-19 pandemic, with public debt rising to 64%.

"The public debt burden for most sub-Saharan African countries will stabilize at a substantially higher level in 2021, with the region's average debt standing at 64% in the short and medium term," said the agency's vice president. Moody's rating, Kelvin Dalrymple.

In a statement sent to Lusa, which accompanies the release of a report that details Moody's opinion on the challenges in this region, the official adds: “We do not expect debt levels to fall in the foreseeable future, as the capacity to generate revenues continues weak, and these higher debt volumes, lower government revenue and higher interest costs will pose even more challenges to debt sustainability. ”

"Higher levels and less ability to pay the debt, and less financial pillows pose significant challenges for countries in the region, given their limited institutional capacity," the statement said.

Moody's anticipates that the recovery will be uneven, varying across sub-regions.

"Recovery in the region will be slow, with far-reaching implications for the already reduced ability to generate revenue," warn analysts, noting that the combination of low economic growth and high public spending "will lead to higher deficits and heavier debts in the region" .

In addition to the debt issue, essential to finance the development and recovery of African economies, Moody's also points out that these countries face “comprehensive institutional and governance challenges that limit their ability to fight the pandemic, which has triggered more unemployment and greater income inequalities that are likely to increase social risks in several countries ”.

For Moody's, the most concentrated economies and energy exporters “will recover at a slower pace due to low energy prices”, as will tourism-related economies, while non-energy exporting economies in East Africa will continue to be the most dynamic.

The African continent currently records 76.762 deaths due to covid-19, in a total of 3,1 million cases in the 55 member states of the African Union, according to the organization's Center for Disease Control and Prevention (Africa CDC).

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